Wednesday, August 28, 2013

Can "all natural" food be bioengineered?

Parker sued Smucker over Crisco Pure Vegetable Oil, made
from soybean oil; Crisco Pure Canola Oil, made from rapeseed oil; Crisco Pure Corn
Oil, made from corn oil; and Crisco Natural Blend Oil, made from combined
rapeseed, sunflower, and soybean oil. She bought the first product.Her claims were based on the use of “All
Natural” next to the oil’s name on the packaging.Parker alleged that the oils weren’t natural
because they were made with genetically modified (“GM” or “bioengineered”)
crops, and are also “so heavily processed that they bear no chemical
resemblance to the ingredients from which they were derived.” She alleged that
the appearance of naturalness deceived consumers into buying/paying more than
they would have.

Parker alleged an “array of definitions from industry,
government, and health organizations” that
“all characterize bioengineered crops as having been scientifically altered to
combine one plant’s genetic material with another’s in ways that do not occur
naturally.” Smucker itself states: “Due to expanding use of biotechnology by
farmers and commingling of ingredients in storage and shipment, it is possible
that some of our products may contain ingredients derived from biotechnology.” Parker
also alleged that most of the relevant agricultural sources were GM, and therefore
alleged that Smucker had to be using non-natural GM crops in its oils.

Parker’s second claim, that the oils weren’t natural because
of extensive processing that removed the source plants’ original chemical
properties, was based on distinctions in manufacturing processes.Extraction methods like coldpressing
allegedly “allow the oils to retain the chemical composition occurring in
nature,” while Smucker’s more chemical methods modify the oil beyond
recognition, including “alkali-neutralization, meant to separate free fatty
acids from the neutralized oil; bleaching and deodorizing, meant to lighten the
oil’s color and minimize its odor; and conditioning.” This allegedly involved “harsh,
potentially harmful chemicals that render the Oils less like natural oils
extracted mechanically and more like unnatural chemical composites.”

Parker brought the usual California claims, including
warranty claims, and Smucker moved to dismiss.

First, Smucker argued that she failed to plead with particularity
or plausibility either that the oils contained GM ingredients or that the
processing made the oils non-natural.As
to the first, Smucker only admitted the possibility it was using GM crops, and Iqbal requires “more than a sheer
possibility,” but the court found the pleadings sufficiently plausible.As for the processing, Parker didn’t need to “set
out scientifically precise descriptions of how the Oils’ chemical makeup
changes. She only needs to describe the who, what, when, where, and how of the
allegedly misleading conduct, which she has done: Plaintiff’s FAC describes
Defendant’s chemical processing of the Oils, states that this renders them
non-natural, and concludes that if the Oils are non-natural then the ‘All
Natural’ tag is false or misleading. The truth of this theory remains to be
litigated, but it cannot be dismissed on the pleadings.”

The court also found that Parker had standing to bring
claims based on all the oils: there was sufficient similarity between the
products and they bore the same alleged mislabeling.They were all the “same kind” of product
(despite the different oilseeds).

Smucker argued preemption: the FDA has long rejected a
requirement that bioengineered foods must be labeled differently, having
determined that there’s no material difference between bioengineered and
non-bioengineered foods.Also, the FDA hasn’t
stated any intention to alter its longstanding position not to adopt any
regulations governing the term “natural,” regardless of consumers being misled.
Thus, Smucker argued, Parker’s lawsuit
sought to impose new and different labeling standards.

Parker rejoined that she wasn’t trying to do that, merely to
enforce the ban on false/misleading statements, which in this case includes “All
Natural” given the actual contents of the oil.Smucker could have left “All Natural” off the labels, but its presence
was misleading; this wasn’t a preempted claim. Smucker might not be required to
disclose its use of GM ingredients, if such exist, but Parker was making a
different argument.(I feel that this
conclusion is in some tension with the 9th Circuit’s reasoning in Pom Wonderful, but then again who knows
what that case means?)

Smucker also argued that FDA common or usual name rules
preempted Parker’s claims: it would violate the regulations if it labeled its
ingredients as, e.g., “bioengineered soy.”But that wasn’t what Parker was asking Smucker to do, even though she
alleged that she wouldn’t have bought any of its oils had they been so
labeled.This wasn’t a nondisclosure
case.

Turning to the sufficiency of the pleadings, Smucker argued
that Parker failed to allege that its statements would likely deceive a
reasonable consumer, given the FDA’s policies on bioengineered ingredients and
the term “natural.”This wasn’t an
appropriate holding on the pleadings.“[T]he
Court cannot as a matter of law conclude, as Defendant urges, that reasonable
consumers would all understand that packaged, non-organic foods may contain
bioengineered ingredients and that the only way to avoid such ingredients
completely is to buy only certified organic products.”Rather, Parker alleged that “a reasonable
consumer would read the ‘All Natural’ label, assume that such a product
contains no bioengineered or chemically altered ingredients, and would then be
misled if the product did in fact contain such things.”This wasn’t capable of being resolved as a
matter of law.

The express warranty claim survived: Parker alleged that
Smucker’s failure to deliver an “All Natural” product constituted a breach of
warranty. Smucker argued that the claim was mere puffery and that the parties
weren’t in privity.But California has
an exception to the privity requirement that allows breach of express warranty
claims arising from affirmations of fact made by manufacturers in labels or
advertisements. And “All Natural” “does
not amount to mere puffery because it is not outrageous and generalized.”

Unsurprisingly, the court also declined to apply the primary
jurisdiction doctrine. “[V]arious
parties have repeatedly asked the FDA to rule on ‘natural’ labeling, and the
FDA has declined to do so because of its limited resources and preference to
focus on other priorities. … [R]eferring the matter to the FDA would do little
more than protract matters.”

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